Sudan Will Float Currency Once it Has Sufficient Reserves
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The Claim
The decision to float the Sudanese Pound is awaiting the signature of President Abdullah Hamdok.
News posted on
Emerging story
A headline by Sudanese news website, Darfur 24 claims that the decision to float the Sudanese Pound is awaiting the signature of President Abdullah Hamdok. The news is also being shared by social media users, sprouting fear and panic at an already quickly depreciating Sudanese Pound and rising inflation. The news circulating implies that at any moment Hamdok could float the currency, causing the Pound to weaken further. The official exchange rate is fixed at an average of SDG55 while the more active black market rate is ever changing, at approximately SDG370 at the time of this article.
Misbar’s Analysis
Despite the news circulating the Sudanese Pound will not be floated until certain conditions are met. According to the previously acting Minister of Finance Heba Muhammad Ali, the country will only make a decision to float its currency when it has enough foreign reserves, and that it is also in talks with several parties to obtain loans and grants. She added that “the timing for floating the currency is determined by having the appropriate circumstances so that there isn't a big jump in the exchange rate."
While Kristalina Georgieva, director of the IMF said that they were working "very intensively" with Sudan to set the preconditions for significant debt relief. They are also working to implement a 12-month monitoring program which may lead to a bailout of substantial amounts in external debt. A prerequisite for the monitoring program is to bridge the gap between the official exchange rate and the black market rate, which can only be done by securing foreign currency. Although the article is factual, the headline is misleading, the floating of the exchange rate depends on a number of factors that may still take a while to implement fully, and therefore at this time, the currency will not be floated. However, the news on social media reflects the headline rather than the factual body of the article. This is the second time recently that rumors of floating the currency have spread, in November 2020 Hamdok denied rumors of floating the exchange rate.
